Magazine article American Banker

Mobile Pay System Uses Bar Codes as Alternative to NFC

Magazine article American Banker

Mobile Pay System Uses Bar Codes as Alternative to NFC

Article excerpt

Byline: Will Hernandez

A San Francisco startup is offering a mobile phone payment system based on bar codes, on the assumption that wireless carriers and merchants will continue to resist near-field communication technology.

A numberof banks and card companies have tested contactless payments using NFC chips, but Christopher Boone, the president and chief executive of Cimbal Inc., said there are "major problems" with making the technology widely available to consumers.

The problems center mostly on the cost of installing the chips in phones and the cost of upgrading merchants' terminals to accept contactless transactions, Boone said.

The payments system that Cimbal announced Tuesday uses two-dimensional bar codes to initiate person-to-person payments, pointofsale transactions and online purchases. The software turns a smartphone's camera into a scanner that reads bar codes displayed on another phone or on a computer screen.

The application is available for Apple Inc.'s iPhone and "in the near future" will be available for phones that use Google Inc.'s Android operating system and Research in Motion Ltd.'s BlackBerry devices, Boone said.

The service can currently be used only for person-to-person transfers between Cimbal users, but Boone said his company expects to begin offering other payment options when it announces merchant partners. Cimbal also plans to support coupons, merchant loyalty programs and location-based offers.

Users must register online and link their Cimbal account to a valid bank account.

To initiate a person-to-person transfer, the recipient creates a payment request on his phone or online. Cimbal's system then produces a single-use bar code on the phone or computer screen; the bar code does not include transaction details or other sensitive data.

The person making the payment launches the Cimbal software on a phone, enters a PIN and uses the device's camera to scan the bar code. …

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